Types Of Ownership Structures Research Articles

The Impact of Ownership Structure on Financial Performance; A Comparison Study of Two Chinese Banks

Interest on the effect of ownership structure and financial performance has grown much, yet researchers have provided mixed results. This study aims at investigating the relationship between state-owned and joint venture type of ownership structures by testing whether or not there is a difference in their performance. The study used quantitative methods to find out if there is a significance difference in performance of two types of firms namely State Owned and Joint venture. The variables used were Return on asset, Return on Equity, Capital Adequacy, Non-performing Loans and Earnings per Share. Further, T-test was used to test the difference in performance of the two types of firms. The results have revealed that there is no significant difference in performance between the two types of ownership structure. Statistically, the performance of state-owned and joint ventures is the same. This means the efforts to radicalize the state-owned companies have paid off by eliminating the impact of ownership structure on financial performance of the firm.

Corporate Ownership, Corporate Control and Corporate Performance in Sub-Saharan African: Evidence from Nigeria

This paper investigates the relation between corporate ownership and corporate performance of listed companies in Nigeria, a foremost Sub-Saharan African country during the period 2002-2007. The data is obtained from the firms’ annual reports and accounts and the Nigerian Stock Exchange daily performance reports. The combination of 70 firms and six-year period studied provides a balanced panel with 420 observations for panel data analysis. The results from the ordinary least square (OLS) regression analyses show that there is a strong connection between foreign ownership structure and firm performance. Foreign ownership structure is found to exhibit significant improvements in firm performance; it adumbrates eclectic competitive advantages in ownership, control and internalization respects over other types of ownership structure. We find no statistically significant relation between concentrated ownership and firm performance. Insider or managerial ownership, however, exhibits significant decline in firm performance. These findings are consistent with the view that firm performance is a negative predictor of insider ownership. We also find support for the notion that management is apathetic to holding equity stakes in their underperforming firms.

Cash flow and growth considering different ownership structure

Purpose– The purpose of this paper is to examine the effect of financial constraints on firm growth considering six types of ownership structure. According to the theory of financial management and asymmetric information theory, external funds are costly for small firms. However, some ownership structures may alleviate cash flow-growth sensitivity. The paper considers different types of ownership structure to study cash flow-growth relation and its sensitivity.Design/methodology/approach– Results are drawn from a dynamic panel data model under the two specific empirical models. Those designs can capture important empirical meanings.Findings– The sensitivity of growth to cash flow decreases significantly when managers control larger proportions of a firm's stock and when a firm belongs to a conglomerate. The findings also show that small and young firms grow faster. R&D and advertising expenditures also motivate a firm's growth, as do profitability and abundant cash flow.Originality/value– This paper uses a dynamic panel data model to investigate the effect of cash flow on firms' growth under six types of ownership structure. The sensitivity analysis of growth to cash flow provides new results for traditional literature. In fact, different ownership structures lead to distinct cash flow-growth sensitivity.

Relación entre Concentración de Propiedad Familiar y Discrecionalidad directiva: Evidencia del caso de México.

This study assesses the impact of three different types of ownership structure (family, institutional, financial, and external blockholders) in the quality of financial reporting information (under the accrued basis on the financial statements), a variable known as "earnings management" on to managerial discretion (as measured by the model of Jones (1991)). We test the data from 89 share issuers or listed Mexican companies for the period 2005-2011, performing econometric analysis considering fixed effects panel data and annual frequency. Negative signs obtained on the relationship between family ownership structure and managerial discretion, and in the relationship between institutional-ownership structure.

WAGE BARGAINING AND MERGER INCENTIVES WITH ASYMMETRIC COSTS

ABSTRACTThis paper examines how wage bargaining within each firm influences the relationship between an equilibrium ownership structure and the most preferred ownership structure from the viewpoint of social welfare, in a unionized oligopoly of asymmetric firms with respect to productivity of capital. We consider the merger incentive of each firm’s owner when the wage level is determined through bargaining between the firm’s owner and union. We derive a condition for both the degree of cost asymmetry among existing firms and the relative bargaining power of each firm’s owner to her/his union such that each ownership structure can be observed in equilibrium. We also show that although the two types of ownership structures with the merger involving the least efficient firm can be equilibria and socially optimal, these structures are observed only when both the degree of cost asymmetry and the relative bargaining power of each firm’s owner are moderate. Finally, we analyse the relationship among the cooperative game approach employed in this paper and two non‐cooperative merger formation approaches, and examine the robustness of the results obtained in this paper against the change in the assumption regarding each firm’s cost function.

The Influence of Institutional and Government Ownership on Firm Performance: Evidence from Kuwait

Drawing on prior theoretical and empirical research examining corporate governance mechanisms, this study empirically explores the effects of institutional and government ownership on the performance of firms listed on the Kuwait Stock Exchange (KSE). Both a market-based measure (Tobin’s Q) and an accounting-based measure (ROA) are used to measures firm performance. Based on a sample of 134 firms listed on the KSE in the year 2010, regression analysis results show a positive relationship between institutional investors and KSE firm performance, suggesting the powerful and influential role institutional investors play as a corporate governance mechanism. In contrast, a negative relationship is observed between government ownership and KSE firm performance, implying worse market performance when government ownership exists. The findings imply that different types of ownership structures have different affects on firm performance. Some ownership structures enhance performance while others worsen performance.

Inter-Organizational IT Capability in China

Prior studies of information technology (IT) capability mostly focused on dimensions and effects of IT capability at intra-organizational level in western context. This paper extends intra-organizational IT capability to inter-organizational IT capability, specifically examining process-oriented inter-organizational IT capability from a process-oriented perspective in an emerging market context. The authors use survey data from Chinese firms to identify dimensions of inter-organizational IT capability and validate its scale, compare the differences of inter-organizational IT capability in firms with three types of ownership structure, and test the relationship between these inter-organizational IT capability dimensions and firm performance. A comparative analysis reveals that seven inter-organizational IT capability measures identified in Chinese context are extended or more important than in the Western context. Empirical results show that inter-organizational IT capability varies between state-owned enterprises and non-state-owned enterprises. It is also found that four dimensions of inter-organizational IT capability have different impacts on firm performance.

A socio-political analysis of policies and incentives applicable to community wind in Oregon

As a new type of ownership structure, community owned wind projects are becoming more and more important in today's wind energy generation in the U.S. Unlike traditional large wind farms, community wind features local ownership and small-scale generation capacity. The goal of this paper is to identify policies, incentives, and regulations in place that are applicable to community wind projects in Oregon by interviewing project representatives and governmental officials and to depict the Oregon context from strategic, tactical, and operational perspectives for researchers, farmers, private businesses, government entities, and others who are interested in learning about the community wind in the state.

Ownership structure, board governance, dividends and firm value: an empirical examination of Malaysian listed firms

Corporate governance mechanisms have emerged to tackle agency problems and ensure that shareholders' funds are not expropriated or wasted on unprofitable activities. This paper aims to examine the effects of governance mechanisms of dividend, types of ownership structure and board governance on firm value and types of ownership structure and board governance on dividend. The paper utilises panel data analysis of firms listed on the Bursa Malaysia from 2002 to 2005. The results provides additional insight into effects of the governance reforms undertaken in Malaysia, which aim to tighten requirements for board independence, smaller board size and non-duality role.

Simultaneous Relationships Between Corporate Governance Practice and Firm Value

The main purpose of this study is to investigate whether there is a simultaneous relationship between Corporate Governance (CG) practice and firm value. This study also investigates: 1) the effect of risks and firm profitability on firm value; and 2) the effect of ownership structure (i.e., regulated, state-owned-entreprise (SOE), foreign, and institutional investors) and company size on CG practice. Based on the corporate governance scores rated by the Institute of Indonesian Corporate Directorship (IICD) in 2005, the study finds that corporate governance practice provides a positive effect on firm value, but not vice versa. This study also shows that: 1) firm value is affected positively by profitability but not affected negatively by risk; and 2) the types of ownership structure, i.e. SOE, foreign, and regulated industry enhance CG practice. Finally, company size positively affects CG practice. Meanwhile, the study fails to find a positive association between ownership by institusional investors and CG practice.

The Balance of Power in Polish Company Code Regulations: An Eastern European perspective on Corporate Governance

This article contributes to the ongoing discussion on the normative efficiency of strategic control and the operational oversight of business in public limited companies from the Eastern European point of view, especially since some Polish regulation could be seen as an example of best practice for international shareholders. The article will attempt to answer the question: Using the appropriate legal tools and instruments available under Polish company law, is a balance of power possible within a corporation's bodies? It will consider various aspects of company law such as: the composition, powers and functioning of management boards as well as; the specific position and related duties of supervisors, their conflicts of interest, the role of external auditors, liability, the expected behavior of shareholders and the use of business judgment rules. There are certain factors and underlying forces which determine a divergence of the Polish regulation from that of the celebrated theories in Western Europe. The evidence of empirical observation regarding the type of ownership structure leads to an exceptional legal diversification of the monitoring and enforcement of corporate governance and subsequently allows us to see the advantages and disadvantages of such a system. More than three years after the begin of the economic crisis, it is necessary to review recent evidence and the possible impacts of the forthcoming EC measures on ‘crisis management’.

Uncovering the Relationship between FDI, Human Capital and Technological Progress in Chinese High‐technology Industries

AbstractUsing a panel dataset for 28 sub‐industries from 5 Chinese industries from 1995 to 2006, this paper examines the impact of human capital, R&D expenditure and FDI spillover on the productivity improvement of Chinese high‐technology industries. The whole industry sample results suggest that human capital promotes total factor productivity, technical change and technical efficiency change, but that FDI lowers all of these factors in Chinese high‐technology industry. When we distinguish between types of ownership structure in the industries, we find that human capital improves technical change but lowers technical efficiency change, whereas FDI only improves technical efficiency change in state‐owned and state‐controlled enterprises but reduces technical change in state‐owned and state‐controlled enterprises and joint ventures.

Diversified business groups and corporate restructuring in China

PurposeThis paper aims to explore the roles different ownership structures, the joint effect of related and unrelated diversification strategies, and previous performance levels have on the restructuring strategies of such firms.Design/methodology/approachAnnual reports of publicly traded firms in the two Chinese stock exchanges are used to collect data. Multiple regression and ANOVA analysis are used to examine the impact of ownership structure types, match between diversification strategies, and previous performance on the change of business scopes of the sample business groups.FindingsCompared to other ownership types, government owned business groups tend to increase their business scope during asset restructuring, while private business groups tend to decrease their scopes through divestitures and spinoffs. Poor previous performance is also found to be negatively related to change in business scopes. The “match” between related and unrelated diversification strategies of the business groups leads to increase in business scopes, while “mismatch” between these two strategies tends to lead to decrease in business scopes.Practical implicationsThis study provides some recommendations to managers and public policy makers in emerging economies. There is a need to monitor the changing institutional environment a firm operates in. It is up to the managers of business groups to determine the degree of market imperfections they are facing and the need to compensate with internal market mechanism and social exchange mechanism within the group structure. As China opens its door further to private ownership and foreign ownership, the pressure to increase efficiency and effectiveness along with the continuous improvement of the institutional environment will require that managers adopt strategies that can enhance the competitiveness of the firms, whether it is through further diversification or scope reduction.Originality/valueThis research deepens our understanding of restructuring strategies of Chinese business groups, by linking factors such as ownership structure, diversification strategies, and past performance to scope changes in these groups. It can broaden our understanding of corporate restructuring in transitional economies, such as China and India.

Performance and Merton-type default risk of listed banks in the EU: A panel VAR approach

This paper provides empirical evidence that sheds new light into the dynamic interactions between risk and efficiency, a highly debated issue. First, we estimate three alternative measures of bank performance, by employing a directional distance function framework, along with a cost frontier and a profit function. As a second step, we calculate a Merton-type bank default risk. Then, we employ a panel VAR analysis, which allows the examination of the underlying relationships between efficiency and risk without applying any a priori restrictions. Most evidence shows that the effect of a one standard deviation shock of the distance to default on inefficiency is negative and substantial. There is some evidence of a reverse causation. As part of a sensitivity analysis, we extent our study to investigate the relationship between efficiency and default risk for banks with different types of ownership structures and across financial systems with different levels of development.

Ownership Structure, Expatriate Policy, and Regionalization: Evidence from Taiwan’s Family Business Groups, 2000‐2002

Based on the panel data analysis of Taiwan’s family business groups from 2000 to 2002, this research attempts to investigate the relationships among the types of ownership structure, particularistic ties, and the engagements in regional markets from a social capital perspective. The result indicates that a family business group’s use of particularistic ties is contingent on its relative centralization in decision‐making. Consequently, the family business group’s use of particularistic ties in subsidiaries significantly influences its engagements in regional markets. This study highlights the possible role of particularistic ties as a kind of firm‐specific advantage existing within family business groups when expanding internationally. Furthermore, it indicates that the indigenous particularistic ties intrinsic to Great China societies have implications for multinational companies in the context of this region.

Multiple goals and ownership structure: Effects on the performance of Spanish savings banks

Spanish savings banks (SBs) are financial institutions with a wide mission that includes different stakeholders’ goals. Profit maximization is only one among several goals, and the widespread use of cost or profit efficiency as the only comparative performance measure may prove to be insufficient in this context. To overcome this problem, we build an aggregate performance index for organizations with multiple goals. Furthermore, we show how the ownership structure of SBs influences their economic behavior in two basic ways: (1) the performance level and (2) their goal priorities. In particular, we distinguish two types of ownership structures in our application, namely, organizations controlled by Public Administrations and those controlled by insiders (i.e. managers and workers). Our results indicate that each type has different priorities and differ in their performance indexes. More specifically, the empirical analysis shows that insider-controlled SBs favor goals related to profit maximization and the universal access to financial services and, furthermore, they perform better. In contrast, contributing to regional development becomes the most favored goal when Public Administrations have a majority in the bank.

Does Ownership Structure Affect Corporate Performance? Evidence from the Divestiture Market

This paper examines the effect of ownership structure on the market assessment of asset sales. Three types of ownership structures are identified: large block outside, inside, and widely held. Empirical results indicate that firms with large block outside shareholders experience significantly positive announcement effects for both buying and selling firm samples. These are significantly greater than those for the inside shareholder and large widely held firms. This paper also examines whether ownership structure of the firm being transacted with and disclosure of the price of the transaction has an effect on the market assessment of the deal.lease enter abstract text here.

Corporate Governance and Financial Distress: evidence from Taiwan

Prior empirical evidence supports the wealth expropriation hypothesis that weak corporate governance induced by certain types of ownership structures and board composition tends to result in minority interest expropriation. This in turn reduces corporate value. However, it is still unclear whether corporate financial distress is related to these corporate governance characteristics. To answer this question, we adopt three variables to proxy for corporate governance risk, namely, the percentage of directors occupied by the controlling shareholder, the percentage the controlling shareholders shareholding pledged for bank loans (pledge ratio), and the deviation in control away from the cash flow rights. Binary logistic regressions are then fitted to generate dichotomous prediction models. Taiwanese listed firms, characterised by a high degree of ownership concentration, similar to that in most countries, are used as our empirical samples. The evidence suggests that the three variables mentioned above are positively related to the risk for financial distress in the following year. Generally speaking, firms with weak corporate governance are vulnerable to economic downturns and the probability of falling into financial distress increases.

Margin regulation and market quality: a microstructure analysis

We find that trading volume increases and market liquidity remains unchanged, while the adverse selection and order-processing cost components of the spread increase and decrease, respectively, after margin levels decline when stocks become margin-eligible. This evidence indicates that the information content of trades has increased, thereby improving market quality. However, no changes were detected after the 1997 regulatory reforms. These results have implications across a broad swath of corporate finance dimensions, including the (1) cost of capital, (2) public vs. private financing decision, (3) form of managerial compensation, (4) type of ownership structure, and (5) degree of shareholder monitoring.

Ownership, Control and Performance of Turkish Listed Firms

The paper describes the main characteristics of ownership structure of the Turkish companies listed on the Istanbul Stock Exchange. We present information on the pyrimidal and complex ownership structures within business groups, on the main owner classes, and on changes in large shareholdings. Ownership is highly concentrated in Turkey, families being the dominant shareholders. Changes in large shareholdings do not suggest the existence of an active market for share stakes. We also show that concentrated ownership and pyramidal structures have a negative effect on performance as reflected in lower return on assets, market to book ratios and dividend payments. We conclude by discussing some important problems introduced or fostered by the presence of this type of ownership structure.